Mortgage Investment Corporation (MIC) is produced by a legislation of Canadian federal government in 1973 and defined under Section 130.1 of the Income Tax Act by the Canada Revenue Agency. To meet the investment needs of ordinary folks, MIC offers investors with limited amounts of capital the opportunity to invest in a well-diversified, high-yielding and secured portfolio, while making up for bank loan deficiencies for the market. As one of Canada’s unique investment tools, MIC does not invest capital in securities, but invests in a large pool of mortgages. Such securitization by mortgage highly reduces investors’ risk.

Designed only for the Canadian real estate market, MIC is mainly suited for residential mortgage lending. An MIC can be owned by investors by way of owning shares, with any single shareholder not allowed to take up shares equivalent to more than 25% of such MIC’s total capital. The annual net income of MIC must be 100% distributed to investors according to their proportional interest in the MIC, and distributions are in the form of dividends which are treated as taxable interest to each investor (MIC is exempted).

In order to protect the interests of investors, MIC is required to comply with Canada Revenue Agency (CRA)’s tax requirements as licensed financial institutions, and be governed by Ontario Securities Commission (OSC). Annual financial reports must be issued by certified public accountants and audited by an independent third party auditing institution.

A management company normally will be appointed by the MIC to administrate and consult on mortgage trading questionor may identify suitable mortgages for the MIC to invest, and will be paid a management fee in accordance with a service agreement.

Statistics shows that in 2011, loans from MIC for real estate have accounted for 7% of the mortgage loan market in Canada, totaling about $70 billion Canadian dollars.